The sale of Burmah

Castrol to BP Amoco
Group 3:
Cao Thanh Lan
Nguyen Doan Ngoc Hien
Nguyen Thi Hoai Thuong

Contents

Introduction

Burmah Castrol in 1990s

Burmah Castrol timeline

Transformations in 1997

Recommendation to Tim Stevenson

Recommendation the sale of Burmah Castrol

Issue of BP since acquired of Burmah Castrol

Strategy of BP

Recommendation issue of BP

Introduction
The company was

founded in 1886
The company is the

worlds leading supplier of

automobile and
motorcycle lubricants.
It has more than 150

subsidiaries operating in
about 55 countries
Business bought included

Castrol, signal oil and gas.

 BP called the Anglo -Persian Oil Company,

later became British Petroleum

In 2000, BP agreed to purchase Burmah

Castrol

Burmah Castrol in 1990s

Strengths

Weaknesses

Very successful developing world

position, particularly in Asia
Pacific.
Acquisition ability
Chemicals became higher
performer through cost cutting

Reduce in share price in Castrol

Lack of vision that affected
company internally.
Not being market responsive

Opportunities

Threats

Expansion
Implications of conglomerate
creation
Ability to improve operating
efficiency.

Over-expansion could have

impact on management
Substantial (75%) dependence of
total profits on singular tier
within the structure

Burmah Castrol timeline

Before 1997:
Expansion and focus on acquisition to engage

into chemical sector, conglomerate

After 1997:
Selling most of the companies that they bought

before recession
Breaking off into two divisions
Expanding chemical division by buying out new

companies

Transformation in 1997
Redesigned strategy
Lack of decision marking process
shareholders value as a driver force to the

company operations and profit generation

Appearance of decentralized business to focus on

local customers with increased attention.

Recommendation to Tim Stevenson

Initially approach other major player.

Fusion development

Recommendation the sale

of Burmah Castrol

They should face of value provision to shareholders,

big competitors and their ability to utilize

economies of scale.
They should improve ability to strategically ally with

major competitors.

Issue of BP since acquired

of Burmah Castrol
The acquisition, which was finalized in mid-

2000, gave BP Amoco the second largest

market share in lubricants in Europe.
It allowed the company to reduce costs by

eliminating redundant jobs

Strategy of BP

Over the first 3 years of the 21st century: To

increase its gas marketing and trading

business by 9 to 11 percent annually.
Expected its retail petroleum business to

grow by only 3 to 4 percent annually.

In 2003: BP estimated gas to account for

more than 40 percents of its daily

hydrocarbon production.

Recommendation issue of
BP
BP should invest much on renewable energy

sources.
The strategy should also establish a body of

expertise in greenhouse gases.

The CEO should ensure more investment in

the pipeline.
The company should increase expenditures

on infrastructure maintenance and

employee safety.